Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

Is going to medical school a wise financial decision?

Wall Street Physician, MD
Finance
July 30, 2018
Share
Tweet
Share

It is no secret that medical school is getting very expensive. Over the past 20 years, the cost of medical school has greatly outpaced the rate of inflation, and medical school debt is rapidly rising.

The average medical student now graduates with over $192,000 in student loans, but with the cost of attendance for the most expensive private medical schools approaching $100,000, there are some physicians who are finishing residency with $300,000 or even $400,000 in student loans.

The rate of increase in medical school tuition, with its increasing student loan burden as a consequence, has not significantly deterred college students from applying to medical school in record numbers. In 2017, 51,680 students applied for 21,338 spots.

While physicians have to take out massive amounts of student loan debt, because they enjoy the highest average salaries of any profession, student loans can typically be quickly paid off with only a few years of diligent saving.

However, are we reaching a point where it may no longer be financially prudent to attend medical school? For example, should a prospective primary care physician or pediatrician who might face up to half a million dollars in student loans consider against attending medical school?

Student loan forgiveness

With government student loan forgiveness programs, there’s currently a natural ceiling on the effective maximum student loan burden physicians can face. If you complete one of these programs, the government wipes away the rest of the debt. So even if you had $2,000,000 in student loan debt, if you can complete a loan forgiveness program, the amount of student loans you actually had to pay back with interest is much less than what you took out.

Public service loan forgiveness

For now, the best student loan forgiveness program for physicians is the public service loan forgiveness (PSLF) option.

The government will forgive your student loan balance after 10 years of qualifying loan payments. Since qualifying loan payments can begin at the start of residency, most physicians only have to work at a non-profit hospital for 5 to 7 years before being eligible for loan forgiveness.

In many cases, physicians do not have to take a significant pay cut to work at a non-profit hospital and remain eligible for the program.

However, as more and more physicians complete training and have hundreds of thousands of dollars of student loans forgiven, there may be a public backlash against the PSLF program for doctors. The PSLF “loophole” could be closed in the future. One possible revision to the program would be to cap the amount of student loan forgiveness available to PSLF applicants.

Other student loan forgiveness programs

Other forms of loan forgiveness program, such as income-based repayment (IBR), pay-as-you-earn (PAYE), or revised pay-as-you-earn (REPAYE), do not appear to be imminently at-risk for being modified by Congress. But these programs require you to make student loan payments for 20 or 25 years. This unfortunately makes student loan repayments akin to a second mortgage for many physicians, who wouldn’t receive loan forgiveness until they are in their 50s.

ADVERTISEMENT

Other professions are already at this tipping point

While medicine still certainly is a financially smart decision because of its future income potential, the typical or extreme debt/income ratios is increasing in other professions beyond sustainable levels.

Dental school

Dental school is typically even more expensive than medical school because of the increased laboratory and equipment cost associated with dentistry. The average dental student has a whopping $287,331 in student loan debt at graduation, and it is not uncommon to see some dentists with over $500,000 in student loans, and in at least one extreme case, over $1,000,000 in student loans.

Unfortunately for dentists, the income potential for most dentists are even lower than physicians, and there is no shortage of general dentists in high cost-of-living, large metropolitan areas. Therefore, some dentists could be faced with debt/income ratios of 4:1 or even 5:1.

Patterns of dental school admissions could be a foreshadowing of what may happen to medical school admissions because of the increasing cost to attend medical school. These days, most dental students greatly prefer their in-state programs over even elite, Ivy League programs.

While dental students do not have to do a residency to practice as a general dentist in most states, given the high debt/income ratio for practicing dentists in saturated job markets, the fact is most general dentists in large metro areas will have to do a financial fellowship and live like a student for 5 to 7 years after graduation just to pay off their student loans.

Law school

The typical law student has around $100,000 in student loan debt. Law school is only three years and is generally less expensive than medical or dental school, but the availability of high-paying law jobs is limited. Unlike in medicine, there is no guarantee of at least a six-figure salary in law. There are many practicing attorneys who make resident-level salaries for their entire careers.

This was assuming you could even get a law job after finishing law school. There was such a massive surplus of law students compared to law jobs, particularly following the Great Recession, that many law schools had more than half of their graduates not directly using their law degree after graduation. This eventually led to a sharp decrease in law school applications and some law schools had to close because not enough of their graduates were getting law jobs.

With the opening of many new medical schools, but without an accompanying increase in residency spots, it soon may not be a guarantee that a medical student graduating from a U.S. medical school will have a residency spot available to them after graduation. This may make it difficult to assess at the time of medical school matriculation whether you will even have a residency spot after taking on all the student loans.

Conclusion

Do I think medical school is still worth the significant monetary commitment for prospective medical students applying today?

While becoming a physician isn’t the financial slam dunk it used to be, medicine is still an extraordinarily rewarding field financially. It has strong job security, and there are many other reasons why being a physician is awesome. There may be other professions where you might come out financially ahead, but you shouldn’t be going into medicine exclusively for the money anyway. This was as true 20 years ago as it is today.

Because of the government backstop of student loan forgiveness, some physicians often end up effectively paying back only a portion of their student loan burdens. More and more physicians will have to rely on these forgiveness options in the future.

Regardless, physicians will not be able to afford to make the large money mistakes that they could have in the past. More than ever, medical students, resident physicians, and early career physicians need to understand the principles of saving early and adequately, and investing prudently. Medical schools and residency program cannot continue to turn a blind eye to physician personal finance.

“Wall Street Physician,” a former Wall Street derivatives trader , is a physician who blogs at his self-titled site, the Wall Street Physician.

Image credit: Shutterstock.com

Prev

Urgent care centers prescribe more antibiotics. Why is that?

July 30, 2018 Kevin 20
…
Next

The double-edged power of the medications we prescribe

July 30, 2018 Kevin 0
…

Tagged as: Medical school, Practice Management

Post navigation

< Previous Post
Urgent care centers prescribe more antibiotics. Why is that?
Next Post >
The double-edged power of the medications we prescribe

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

More by Wall Street Physician, MD

  • 4 reasons why physicians should hire a financial advisor

    Wall Street Physician, MD
  • Investing in the stock market is like playing that game of rock-paper-scissors

    Wall Street Physician, MD
  • 7 sources of financial anxiety for physicians

    Wall Street Physician, MD

Related Posts

  • The financial barriers of applying to medical school

    Shin Mei Chan and Jamieson O’Marr
  • Medical ethics and medical school: a student’s perspective

    Jacob Riegler
  • End medical school grades

    Adam Lieber
  • It’s time to learn the basics of financial management in medical school

    Aashish Shah
  • How medical school saved this student’s life

    Natasha Abadilla
  • First date with a medical student

    Dr. Glaucomflecken

More in Finance

  • The business lesson new doctors must unlearn

    Stanley Liu, MD
  • The hidden impact of denials on health care systems

    Diana Ortiz, JD
  • Why physicians are unlike the “average” investor

    David B. Mandell, JD, MBA
  • Signing bonuses and taxes: What physicians should know

    Shane Tenny, CFP
  • 5 steps to ride out a non-compete without uprooting your family

    Stanley Liu, MD
  • What every physician should know before buying into a medical practice

    Dennis Hursh, Esq
  • Most Popular

  • Past Week

    • The silent toll of ICE raids on U.S. patient care

      Carlin Lockwood | Policy
    • Why does rifaximin cost 95 percent more in the U.S. than in Asia?

      Jai Kumar, MD, Brian Nohomovich, DO, PhD and Leonid Shamban, DO | Meds
    • Why recovery after illness demands dignity, not suspicion

      Trisza Leann Ray, DO | Physician
    • Why medical students are trading empathy for publications

      Vijay Rajput, MD | Education
    • Addressing the physician shortage: How AI can help, not replace

      Amelia Mercado | Tech
    • Why this doctor hid her story for a decade

      Diane W. Shannon, MD, MPH | Physician
  • Past 6 Months

    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education
    • How scales of justice saved a doctor-patient relationship

      Neil Baum, MD | Physician
    • A faster path to becoming a doctor is possible—here’s how

      Ankit Jain | Education
    • Make cognitive testing as routine as a blood pressure check

      Joshua Baker and James Jackson, PsyD | Conditions
    • How dismantling DEI endangers the future of medical care

      Shashank Madhu and Christian Tallo | Education
    • The broken health care system doesn’t have to break you

      Jessie Mahoney, MD | Physician
  • Recent Posts

    • Why this doctor hid her story for a decade

      Diane W. Shannon, MD, MPH | Physician
    • Reimagining Type 2 diabetes care with nutrition for remission [PODCAST]

      The Podcast by KevinMD | Podcast
    • How AI is revolutionizing health care through real-world data

      Sujay Jadhav, MBA | Tech
    • Ambient AI: When health monitoring leaves the screen behind

      Harvey Castro, MD, MBA | Tech
    • How kindness in disguise is holding women back in academic medicine

      Sylk Sotto, EdD, MPS, MBA | Conditions
    • Why physician voices matter in the fight against anti-LGBTQ+ laws

      BJ Ferguson | Policy

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

View 8 Comments >

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

  • Most Popular

  • Past Week

    • The silent toll of ICE raids on U.S. patient care

      Carlin Lockwood | Policy
    • Why does rifaximin cost 95 percent more in the U.S. than in Asia?

      Jai Kumar, MD, Brian Nohomovich, DO, PhD and Leonid Shamban, DO | Meds
    • Why recovery after illness demands dignity, not suspicion

      Trisza Leann Ray, DO | Physician
    • Why medical students are trading empathy for publications

      Vijay Rajput, MD | Education
    • Addressing the physician shortage: How AI can help, not replace

      Amelia Mercado | Tech
    • Why this doctor hid her story for a decade

      Diane W. Shannon, MD, MPH | Physician
  • Past 6 Months

    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education
    • How scales of justice saved a doctor-patient relationship

      Neil Baum, MD | Physician
    • A faster path to becoming a doctor is possible—here’s how

      Ankit Jain | Education
    • Make cognitive testing as routine as a blood pressure check

      Joshua Baker and James Jackson, PsyD | Conditions
    • How dismantling DEI endangers the future of medical care

      Shashank Madhu and Christian Tallo | Education
    • The broken health care system doesn’t have to break you

      Jessie Mahoney, MD | Physician
  • Recent Posts

    • Why this doctor hid her story for a decade

      Diane W. Shannon, MD, MPH | Physician
    • Reimagining Type 2 diabetes care with nutrition for remission [PODCAST]

      The Podcast by KevinMD | Podcast
    • How AI is revolutionizing health care through real-world data

      Sujay Jadhav, MBA | Tech
    • Ambient AI: When health monitoring leaves the screen behind

      Harvey Castro, MD, MBA | Tech
    • How kindness in disguise is holding women back in academic medicine

      Sylk Sotto, EdD, MPS, MBA | Conditions
    • Why physician voices matter in the fight against anti-LGBTQ+ laws

      BJ Ferguson | Policy

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

Is going to medical school a wise financial decision?
8 comments

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...